Leaving the past behind

Chilean nationalists shout their displeasure at the world court ruling in Santiago, yesterday. The United Nations’ highest court set a maritime boundary between Chile and Peru, granting the latter a bigger piece of the Pacific Ocean but keeping rich coastal fishing grounds in Chilean hands.

By Patricio NaviaFor the Herald

Peru gets more sea, Chile keeps fishing grounds

NEW YORK - The decision by the International Court in The Hague has given the Chilean and Peruvian governments a face-saving way out their dispute over their maritime borders. Because Chile can claim that the Court denied Peru of its most important claims, and Peru can celebrate the fact that the court has given it new sea territory currently under Chilean jurisdiction, both countries will walk away satisfied by the ruling. The ruling will allow Peru to move its maritime border south, regaining an area that it in the 1879 War of the Pacific. Both countries will be able to deepen their already increasingly strong links, free at last of unresolved issues dating back to 1879.

Although the Court ruled in favour of Chile, upholding the existing maritime border for the first 80 miles, the new maritime border will be redrawn from there to the 200th, edging it southwest, transferring control from Chile to Peru of an area of approximately 21,000 sq km. Thus, the ruling formally constitutes a setback for Chile. However, after the Peruvians brought the case to the Court, Chileans knew that their best case scenario was to maintain the status quo. Any other ruling would be a partial loss. Given that Chile’s claim over that sea territory was only based on fishing treaties, the worst case scenario for Chile was to have the entire maritime boundary be redrawn. Since most of the fishing takes places in the first 40 kilometres, there will only be a have a small negative economic impact in northern Chile. Because the Chilean government was prepared for a more unfavourable outcome, there was a sense of relief in Santiago after the decision was announced.

In Peru, the government received the news with joy. After Perú lost a significant size of land to Chile in 1879, nationalists in Peru have always rallied against its southern neighbour. Since Chilean troops invaded Peru all the way into Lima—and savaged and devastated towns during the war—the perception is that The Hague ruling brings symbolic reparations to Peru. Chile might have won the war, but Peru has won the last battle.

Chileans are more than willing to concede defeat in this last chapter of border controversies in hope that Peru will now accept that there are no pending border issues. President Humala has hinted that Peru is prepared to close that chapter and has expressed his intention to open new avenues for economic, commercial and strategic integration with Chile.

Though the area that will be transferred to Peru has strategic long term value, its present value is less important. Thus, Chile is willing to cede that territory in exchange for the new economic opportunities that will open up. For one, Chile suffers from an energy shortage that drives prices higher and makes Chilean mineral exports less competitive. Peru has abundant water and gas resources. Though there has been strong opposition in Peru to exporting gas and electricity to Chile, now that The Hague has given Peru a victory over Chile, nationalist sentiments might diminish and both countries can benefit from energy trade. In addition, Chile now hopes to have the peace of mind associated with having no pending border issues with one of its two northern neighbours.

In Chile, the adverse ruling has also been received favourably because the Court has upheld the border based, at least partially, on the fact that Peru tacitly accepted existing fishing treaties. Because Bolivia has announced that it will bring its own case against Chile to the Court demanding sovereign access to the Pacific Ocean, Monday’s ruling reassures Chile that existing treaties will be upheld. The ruling has indirectly weakened Bolivia’s aspirations that it can legally force Chile to cede territory to allow the country to regain access to the ocean.

In Peru, the ruling has more symbolic than immediate value. President Ollanta Humala and former President Alan García—who first brought the case against Chile to the Court in his second term in 2008—wasted no time in claiming that Peru had won sovereignty. Yet, immediately after scoring their point, they both extended an invitation to Chile to begin writing a new chapter in bilateral integration. Humala, who enjoys low presidential approval, and García, who aspires to win a third term as president in 2016, know that nationalism is not enough to win elections. They also need to foster economic growth. Integration with Chile will help achieve that goal. Moreover, precisely because Peru’s least developed region is the southern Andes, promoting integration with Chile will come in handy to alleviate poverty in the most needed regions of Peru.

As both countries’ governments announced they will accept the ruling, there is indication that bilateral cooperation has already began in earnest. Unlike Colombia and Nicaragua, who are still debating over last year’s ruling that was favourable to Nicaragua, Chile and Peru are concurrently sending a signal to the world. Two neighboring countries that can peacefully solve their disputes in a court of law are a desirable and trusting destination for foreign investors.